New York, USA, 7 March 2012 – The energy sector has
a major role to play in global economic growth and recovery, with its indirect
contributions outweighing the already considerable direct effects, according to
a new World Economic Forum report launched today at the CERAWeek energy conference
in Houston, Texas.

The report, Energy for Economic Growth
– Energy Vision Update 2012,provides a framework for understanding the larger economic role of
the energy industry – a role US President Barack Obama emphasized in his most
recent State of the Union Address – at a time when employment and investment issues
are so critical in a troubled global economy. The oil and gas industry, for
example, contributed 37,000 direct jobs in 2011. This drove the creation of an
additional 111,000 indirect jobs during the same period, given an employment
multiplier effect of three. These 150,000 jobs represent 9% of all jobs created
in the United States in 2011. While multiplier effects for solar and wind
energy were lower during operation, their contribution during the construction
phase also reached as high as 3.3 indirect jobs per energy job.

“The
energy industry is unique in its economic importance and has the potential to
be a tremendous catalyst for job creation and sustainable growth without harming
the sector’s overall performance,” said IHS CERA Chairman Daniel Yergin.

The
energy industry is by nature capital intensive and requires high levels of
investment. It thus has the ability to generate significant contributions to
GDP growth, the report says. In the United States, the oil and gas extraction
sector grew at a rate of 4.5% in 2011 compared to an overall GDP growth rate of
1.7%.

The
sector’s highly skilled workforce is also well-paid compared to other sectors,
the report notes. Compensation per worker in energy-related industries is about
twice the average in Germany, Norway, the United Kingdom and the United States
and four times the average in Mexico and South Korea. As a result of higher
wages, energy industry employees contribute more absolute spending per capita
to the economy than the average worker and contribute a larger share of GDP per
worker than most.

“We
always suspected that energy had a vital role to play in the economic recovery,”
said Roberto Bocca, Senior Director, Head of Energy
Industries, World Economic Forum, “but we were still surprised when the data
uncovered the magnitude of the sector’s multiplier effects.”

Energy for Economic Growth –
Energy Vision Update 2012 examines the role of energy prices in the economy. Lower prices reduce input
costs for nearly all goods and services, thus making them more affordable. Over
the short term, economic models show that, for example, lower natural gas
prices will help the US economy in several measurable ways: a 1.1% increase in
GDP in 2013; 1 million more jobs in 2014; and 3% higher industrial production
in 2017 than would be anticipated without shale gas development.

Many
countries such as China, India and South Korea are increasingly focusing on
renewable energy sources, including wind and solar, as potential growth sectors
for their economies. However, the higher costs of these technologies create
trade-offs that must be considered, the report says.

“Energy prices will always be volatile and thus represent a
challenge for long-term economic planning,” said Kenneth Rogoff, Thomas D. Cabot Professor of Public Policy and
Professor of Economics, Harvard University, USA. “The interesting question is
how to make this volatility less economically damaging.”

The World Economic Forum is an international institution committed to improving the state of the world through public-private cooperation in the spirit of global citizenship. It engages with business, political, academic and other leaders of society to shape global, regional and industry agendas.

Incorporated as a not-for-profit foundation in 1971 and headquartered in Geneva, Switzerland, the Forum is independent, impartial and not tied to any interests. It cooperates closely with all leading international organizations (www.weforum.org).